A Bay Area sleep clinic will pay millions to settle accusations of fraud under the terms of a recent Medicare fraud settlement.

The U.S. Department of Justice announced that Bay Sleep Clinic, its owners and operators, and their associated businesses will pay $2.6 million in response to allegations that they made fraudulent claims to the Medicare program for diagnostic sleep tests and medical devices.

Co-defendants in this Medicare fraud settlement include Anooshivaran Mostowfipour and Tara Nader, the co-owners and operators of the businesses that comprise Bay Sleep Clinic.

Mostowfipour and Nader own and operate Qualium Corporation and Amerimed Corporation, both of which were also named defendants. Amerimed was doing business as Amerimed Sleep Diagnostics and Amerimed CPAP Specialists. Qualium owns and operates 20 sleep clinics under the name Bay Sleep Clinic.

Under the terms of the Medicare fraud settlement, the defendants have terminated their Medicare enrollments and will refrain from re-enrolling in the Medicare program for three years.

The government alleges Mostowfipour, Nader and their businesses have been improperly billing Medicare since as far back as April 2002. The companies allegedly conducted sleep diagnostic testing using technicians who lack the licensing or certification required by the Medicare program.

The defendants were also accused of conducting sleep services at unapproved locations. The government alleges Bay Sleep Clinic conducted this testing at locations that had not been properly enrolled or approved, then falsified paperwork to make it appear as if the testing had been conducted at one of the company’s two approved locations.

The government also accused Bay Sleep Clinic of fraudulently billing Medicare for medical devices they supplied to their patients. Medicare rules prohibit providers of diagnostic sleep tests from providing devices directly to their patients.

The defendants also allegedly violated rules against sharing a sleep lab location with a supplier of durable medical equipment.

The DOJ notes that these claims remain allegations only and that no determination of liability has been made.

Medicare Fraud Settlement Results from Whistleblower’s Complaint

This settlement is the culmination of a whistleblower lawsuit originally filed by plaintiff Elma D. After reviewing Elma’s allegations of Medicare fraud, the DOJ intervened in her lawsuit in May 2015.

As an incentive award for initiating this whistleblower action, Elma will receive a payment of about $545,000.

Elma was able to file a whistleblower lawsuit under the False Claims Act. This law allows persons with evidence of fraud against the government to file what’s known as a qui tam lawsuit on the government’s behalf.

The claim is filed under seal at first while the government gets a chance to review the allegations. The government then gets a chance to intervene, essentially taking over the claim as plaintiff.

Whistleblowers like Elma whose claims are successfully prosecuted to settlement or through trial can expect to receive an award as incentive for initiating the claim.

The settled Bay Sleep Clinic Medicare Fraud Lawsuit is Case No. 2-1745 in the U.S. District Court for the Northern District of California.